tiistaina, joulukuuta 11, 2012

Miksi euro perustettiin

The sacriﬁce of the Deutschmark was quite to the liking of the German ruling class. As Hans-Hermann Hoppe has pointed out, there is a ruling class in our societies that uses the state as a device for the exploitation the rest of the population.
The state is the monopolist of coercion and the ultimate decision maker
in all conﬂicts in a given territory. It has the power to tax and make
all manner of interventions. The ruling class is exploitive, parasitic,
unproductive, and has a strong class consciousness. It needs an ideology
to justify its actions and prevent rebellion of the exploited class.
The exploited class represents the majority, produces wealth, is
indoctrinated into obedience to the ruling class, and has no special
class consciousness.

Every
state has its own ruling class and connected interest groups.
Consequently, the ruling class in Germany and the ruling class in France
may have more in common than the German ruling class and the exploited
class in Germany. In fact, the German ruling and exploited classes have
opposite interests. But there are many areas in which the French and
German ruling classes are not competitors and actually may beneﬁt from
working together. Both ruling classes want power: they want to expand
their power vis-à-vis their citizens. They want an ideology to prevail
that favors the state and an increase in the state’s power. Given the
above considerations, it is easy to understand why the German ruling
class, i.e., politicians, banks, and connected industries, especially
exporters, favored the introduction of the Euro.

There were many ways it could beneﬁt from a single currency.

1. The ruling class most likely did not regret geing rid of thevery conservative Bundesbank. The Bundesbank had actedseveral times against the interests and pleas of politicians. Itraised interest rates before elections in, for instance, in-creasing its reputation as an anti-inﬂation central bank world-wide. In addition, the Bundesbank did not want to follow theinﬂation rates of the US and stopped interventions in favor ofthe dollar in March of 1973. This led to the ﬁnal collapse ofthe Bretton Woods System and ﬂuctuating exchange rates. Italso resisted the establishment of an obligation to intervene inthe EMS. Bundesbankers repeatedly resisted demands madeby German and foreign politicians for a reduction of inter-est rates. Some Bundesbankers were also skeptical about theintroduction of the Euro as an instrument toward economicintegration. Leading German politicians often had the bur-den of dealing with the discontent of their neighbors and theuncompromising monetary stance of the Bundesbank. The Euro allowed German politicians to rid themselves of stubborn Bundesbankers, promising the end of the bank’s “tyranny.”More inﬂation would mean more power for the ruling class.German politicians would be able to hide behind the ECB andﬂee the responsibility of high debts and expenditures.The Euro was a step toward the establishment of a worldcurrency. With all currency competition eliminated, politi-cians would have unlimited power. Moreover, international monetary cooperation is easier to achieve between the Fed and the ECB than it would be between the Fed and severalEuropean central banks.

2. Certain German interest groups stood to make gains for them-selves, namely, an “advancement” of European integration in-cluding the harmonization of labor, environmental and tech-nological standards. Indeed, the introduction of the Eurosaved the European project of a centralization of state power.The harmonization of labor standards beneﬁted German union-ized workers. High labor standards in Germany were possibledue to the high productivity of German workers. Workers inother countries such as Portugal or Greece had less capitalwith which to work, making them less productive. In orderto compete with the German worker, the Portuguese neededlower labor standards, which reduced the cost of their labor.The lowering of labor standards—widely feared as “a race tothe bottom”—threatened the high labor standards of Germanworkers. Unionized German workers complying with high la-bor standards did not want to compete with Portuguese work-ers for whom compliance was not required. The competitiveadvantage gained by the harmonization of standards wouldgive German unions leeway to extend their power and privi-leges.The harmonization of environmental standards also beneﬁtedGerman companies because they were already the most ef-ﬁcient environmentally. Competing companies from othercountries with lower standards had to adopt these more costlystandards. Moreover, Green interests were satisﬁed by theimposition of German environmental standards on the restof the European Union. German companies were leading inenvironmental and other technologies and proﬁting from thisregulation. Imposing German technological standards in theEU gave German exporters a competitive advantage.3. German exporters beneﬁted from an inﬂationary Euro in adual way. Other Eurozone countries could no longer devaluetheir currency to gain competitiveness. In fact, currency crisesand sudden devaluations had endangered German exporters.A currency crisis also put the common market in jeopardy.With a single currency, devaluation would no longer be possi-ble. Italian Prime Minister Romani Prodi employed this argu-ment to convince German politicians to allow a debt-riddenItaly to join the monetary union: Support our membershipand we’ll buy your exports. In addition, budget and trade deﬁcits of southern countriesmade the Euro consistently weaker than the Deutschmarkwould have been. Higher German exports were compensatedfor by trade deﬁcits of uncompetitive member states. As aconsequence, German exporters had an advantage over coun-tries outside the Eurozone. Increases in productivity wouldnot translate into appreciations of the currency, at least notwhen compared to the Deutschmark.4. The German political class wanted to avoid political and ﬁnan-cial collapse. Many countries in Europe were on the verge of bankruptcy inthe 1990s. As the ruling class did not want to lose power, itwas willing to give up some control of the printing press inexchange for survival. Countries with less debt such as Ger-many would guarantee the conﬁdence of creditors, so that theoverall level of European debt could be maintained or even ex-panded. This certainly explains the interest of highly indebtedcountries at the verge of bankruptcy in European integration.The ruling class can extend its power by increasing taxes, usinginﬂation, or through higher debts. But taxes are unpopular.Inﬂation also becomes disruptive when at some point citizensﬂee into real values and the monetary system is in danger ofcollapse. Debts are an alternative to ﬁnancing higher spendingand power and they are not as unpopular as taxes. In fact, there may be a “government bonds illusion.” Citizens may well feel richer if government expenditures are ﬁnanced throughbonds instead of through taxes. Nevertheless, they have to beﬁnanced at some point via inﬂation or taxes, lest creditors closethe overly indebted government’s money stream.But why would Germany take on the role of guarantor?Introducing the Euro and implicitly guaranteeing the debts ofthe other nations came along with direct and indirect trans-fers of the Eurosystem. Bankruptcy of the European states,which would have had adverse effects on the German rulingclass, could be averted, at least for some time. A collapse ofone or several countries would lead to recession. Due to theinternational division of labor in Europe, a recession wouldhit big exporters and established companies even in Germany.Tax revenues would fall and the support of the populationwould be reduced.Moreover, the default of a country would probably affect neg-atively the domestic banking system and have a domino effecton banks all over Europe, including Germany. e connectiv-ity of the international ﬁnancial system might lead to the col-lapse of German banks, close allies of the German ruling class,and strong supporters of a single currency. A bankruptcy inform of hyperinﬂation would equally negatively affect inter-national trade and the ﬁnancial system. Sovereign bankrupt-cies could take governments down with them.

In sum, the introduction of the Euro was not about a European ideal of liberty and peace. On the contrary, the Euro was not necessary for liberty and peace. In fact, the Euro produced conﬂict. Itsintroduction was all about power and money. The Euro brought the most important economic power tool, the monetary unit, under the control of technocrats.